Mall econ: Is downtown café space handed out fairly?

Outdoor cafés on the Downtown Mall are often packed in warmer weather, like the one at Rapture shown here, but a revised city ordinance will allow a handful of downtown restaurants to pack in more than others.

File photo by Will Walker

With spring just around the corner, it's time again for an annual tradition on the Downtown Mall: arguing about outdoor café space. City planners have proposed a revised ordinance to settle the issue, but some say it gives a handful of restaurants a competitive advantage.

Back in the 1970s and '80s, when the City was begging folks to open restaurants on the Downtown Mall, there was less at stake. But now that 30 downtown eateries have outdoor patios, size matters.

At the time, Miller's, Sal's, Rapture, Hamilton's, and The Blue Light Grill had been operating with more than 800 square feet. The owners of Zocalo, too, managed to secure more square footage directly from former City Manager Gary O'Connell, who stepped in after the owners complained about getting less space than Blue Light.

It was time, planners explained, to create a more level playing field.

The reaction was immediate. In the midst of a recession, and with the Mall under construction, a thousand signatures were collected in a petition calling for a halt to the re-bricking project, and arguing that it was unfair to limit cafés and penalize restaurants that had pioneered outdoor dining on the Mall.

"You're talking about something that is going to hurt our business," complained a then-manager at the Blue Light Grill during a packed public meeting. "The priority should not be on fairness, but on making sure that restaurants thrive," said another manager.

So much for that simple plan. The push-back caused the the city to back down, and those restaurants with over-the-ordinance spaces were allowed to keep them.

However, the issue erupted again in November when several downtown building owners seeking café space were told there was none available.

Downtown property owner Joan Fenton sought space for a prospective tenant for her building at 114 West Main Street. Trouble was it's in the block where Cinema Taco, Ten, and the Blue Light Grill– all owned by music mogul Coran Capshaw– had taken all the space, a situation that Fenton calls unfair.

"Any restaurant with a café space has a huge economic advantage," she says. "And any restaurant that can't secure a café space will most likely fail."

The issue sparked debate during the February 22 City Council meeting where chief planner Jim Tolbert unveiled a revised café ordinance, created after input from downtown business owners. Again, the six over-sized cafés would be allowed to keep the terrain, but only until the businesses fail or get sold.

Mayor Dave Norris echoed Fenton's concerns, pointing out that some see this as a perceived monopoly of public space, especially around Central Place, where Zocalo and Petit Pois consume nearly all the area north of the fountain.

"Is there any relief for the tenant in that situation?" Norris asked planning director Jim Tolbert, who convened a study group.

"No, sir," responded Tolbert. "It was the consensus of the group– how to say this– that that's just the breaks you get."

"Allowing one restaurant to operate with a patio of more than 800 square feet while denying another the same opportunity is fundamentally unfair," says Maya restaurant owner Peter Castiglione. "The whole idea of grandfathering older businesses runs counter to a free market and fair trade."

However, not everyone sees it that way.

"Why hurt restaurants that are succeeding by taking away their café space?" asks Mike Rodi, manager of Rapture. "New restaurants often fail, but if you take away space from existing restaurants, you could have two places going out of business instead of one."

Councilor Satyendra Huja pointed out that there's really no competition on Central Place because one owner, Ludwig Kuttner's Monticello Associates, controls the property there. Just to the west, Capshaw controls the block. It would appear that O'Connell, when he stepped in for Zocalo, had been referee the dispute between the two titans.

As Fenton suggests, property owners have a great stake in the issue, as café space can mean the difference between leased space and an empty storefront. Interestingly, of the six oversized cafés, three pay rent to out-of-state property owners, and two are owned by well-known multi-millionaires. Sal's is the only café whose day-to-day operator also owns the building.

Suprisingly, it was Kuttner who made the sole public statement at Tuesday's Council meeting, bemoaning restrictions and reminding Councilors that such restrictions were absent when many of the Mall's restaurants were first launched.

Cafe leases seem to be a sweet deal, as the public space includes amenities like free lighting, tree trimming, and wi-fi. And although chilly weather renders cafés unusable for at least four months a year, the City's rent of just $3 per square foot plus a bi-annual fee of $125 is considerably less than restaurants pay indoors, which can run between $12 and $23 a square foot, according to advertised real estate listings.

Others argue that leveling the playing field runs counter to the idea of getting in early to stake a claim.

"Splitting the pie further doesn’t make sense," says Mas chef/owner Tomas Rahal. "Long term, this would have the effect of erasing any competitive advantage those who got there first would have."

Indeed. What a conundrum.

21 comments

Mayor Dave Norris also discusses lessons we can learn and bring back to Charlottesville from our Sister Cities in France, Bulgaria, Italy, and Ghana, on the locally-produced cable talk show Politics Matters with host Jan Paynter: http://bit.ly/polmatters

Greg Jones February 25th, 2011 | 11:55am

Zocalo

Cville Eye February 25th, 2011 | 3:53pm

Jim Tolbert would have Council believe that those restaurants with large areas were grandfathered in when the Mall was built. That is not true. The Hardware Restaurant (dead) and Miller's go all the way back. The rest are newcomers. In each block the restaurant space should be divided equally. However, the city likes to play favoritism. You support them and they will support you. It always depends upon who's asking. Joan Fenton is right. Rapture is wrong. That restaurant would have been deal long ago if Capshaw hadn't propped it up. The city should be attempting to be fair to all concerned. But Jim Tolbert knows nothing about that. Where is the new, expensive City Manager in all of this?

jimi hendrix February 26th, 2011 | 6:16am

This may be sacrilegious, but what about using that old supply and demand theory? The cafes are essentially floor space, at insanely cheap rents compared to storefronts. Then to make things a bit nicer, the city actually supplies the lighting and cleans the floors.

Put the patio space in the hands of a rental agent with 5 year leases. Those with current spaces are grandfathered into current rates and spaces for the first cycle.

Music Lover February 26th, 2011 | 10:39am

Easy solution: Break the available real estate into 400 sq. ft. chunks. Auction each one individually and let the demand determine the rent. On blocks with many restaurants the cost will be high, and on blocks with one or two restaurants the cost will be low. That's the way it works out there in the real world, folks. That IS a level playing field.

The way it is now, you have the city government and its functionaries picking the winners and losers. I can think of nothing worse. New establishments deserve the opportunity to compete in the marketplace, and the PRC is effectively shutting them out of the game.

Music Lover February 26th, 2011 | 10:40am

And to reiterate what Cville Eye noted, where's the nice shiny, new, and expensive City Manager? Don't tell me he's unwilling to get his hands dirty in the face of irate business owners.

cookieJar February 26th, 2011 | 12:03pm

He's too busy scrubbing the monument to "free speech."

max brando February 27th, 2011 | 4:33pm

Seems like a lottery each year or every 2 years would do it. Who can yell about this one? Magnet schools always have a lottery. (But there IS a lot of complaining after the straws are drawn.) And, I think only the property owners should get a chance to draw.
Personally, I think Snooki needs to start selling sandwiches!!

Rick February 27th, 2011 | 6:39pm

We don't go to the Mall anymore ... it has lost its appeal! The beggars and druggies are annoying and most of the stores close way to early.

WOW February 27th, 2011 | 6:40pm

Have common tables were the individual who is using the table can decide were they want to eat. They have a button to push to the restaurant of choice, Menus are brought out and so on. There are huge places like this in Hong Kong. everyone is happy happy happy. What you think?

Cville Ear February 27th, 2011 | 10:14pm

@Rick: "We don't go to the Mall anymore ... it has lost its appeal! The beggars and druggies are annoying and most of the stores close way to early."

Hooray! I can start going to the mall again now that that creep, Rick doesn't go there anymore.

Roberto February 28th, 2011 | 1:20am

Cafes should be obligated to let people sit at the tables if they are closed. Nothing more ridiculous that not having a place to sit when the palces are closed and the tables and chairs are chained up. We all pay taxes and should be able to enjoy the mall.

Dtm patron February 28th, 2011 | 8:38am

I believe the restaurants that have cafe space on the mall should be required to serve great food and great service.

Currently all of the restaurants that have cafe space on the mall serve a mediocre product!

Charlottesville dinners need to demand more from their restaurants. We live in a "foodie" town, but how can that be when menus have stayed the same for 10 years.

We the eater need to require a better product and if these restaurants can not deliver they need to give up and make space for those restaurants that are willing to put the guest first.

jimi hendrix February 28th, 2011 | 2:42pm

@roberto. Yeah that would work about as well as the public bikes. Chairs and tables would be wandering away...

It's Business March 1st, 2011 | 4:25pm

For those who feel that restaurants with larger cafes should be downsized put yourself in their shoes. If for years you have a certain size cafe and then you are told that you will be losing however many square feet, the first thing you have to think about is how many tables you will lose. When you do the math, your restaurant will lose a lot of revenue on a daily basis. And after a few months you can't pay the rent, and you're out.

Thomas March 1st, 2011 | 6:05pm

the real question where are people supopsed to park. city council & dbac still hasn't figured this one out. oh yeah, how about some more usless signs

doesn't time count? March 3rd, 2011 | 10:54am

Sal's has been on the downtown mall since before I was even born. He entered into the area when it wasn't the sprawling downtown space that it is now. He has been there throughout time and I believe that those early people that banked on the downtown mall being successful should be rewarded. Had some of those early businesses not chosen that area and became successful those that are now asking for a spot wouldn't even have the opportunity to be there. The early commitment of the pioneer businesses cleared the way for the opportunities that now exist for new businesses. I do agree though that the “grandfathering” of additional space should end when that particular business leaves or closes.

Fair reporter March 3rd, 2011 | 2:16pm

How about some objective reporting?
"You're talking about something that is going to hurt our business," complained a then-manager at the Blue Light Grill during a packed public meeting.
Sounds more like a statement then a complaint!

Unimpressed March 4th, 2011 | 11:13am

I wonder if Mr. Castiglione thought it was fundamentally unfair to have a larger patio when he was part owner of Zocalo? How about some opinions from more downtown business owners hook writers. This piece reads like an op-ed not objective journalism.

Of course, we always welcome criticism, but an op-ed piece? Come on, unimpressed. By my count, the opinions of four downtown business owners and/or managers are represented here, as well as those of the mayor, another city councilor, and two business owners not on the Mall. Some think the proposed system is fair, some don't. If you have an axe to grind, you've got to do better than that.

Dave

Cville Eye March 17th, 2011 | 4:24pm

@Roberto, if the owners allowed people to sit in the outdoor cafe spaces, who's going to clean up after them? If they are not cleaned up by the end of the day eventually they will lose the privilege of renting the spaces. I think Music Lover has the best ideas. As far as those who has been there a long time, they have made a lot of money by the city's allowing them to rent more than 400 sq. ft. it think it's time for fairness to enter into the picture and everyone should have a chance for outdoor space as far as possible. Many restaurants or their owners have come and gone through the years and maybe the deciding factor is having the larger spaces. Besides it is not until late June that the restaurants downtown start to have customers inside and out so customers are not hard pressed to find seats in their favorite downtown restaurant most of the year especially Sunday through Thursday.